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The Shanghai Expat Package – Whats your worth in Shanghai ?


The future of expat finances in Shanghai

Source of intrigue, jealousy and often downright bitter resentment: the ex-pat package. It’s the subject of hearsay and Chinese whispers and someone else has always got a better deal (or, in the case of journalists, everyone else). We’ve all heard tales of the company who caters for every whim – from the villa accommodation right down to your dog’s diamond collar. But the times they are a-changing in Shanghai – and so are the expats who work here.

Ten years ago a traditional employment contract would have likely included regular R&R (rest and relaxation) trips to the nearest comfortable place to recover from the ‘horror’ of Shanghai. Today, with a Starbucks on every corner, fine wines in every restaurant and a Zara in every mall, this city is no longer such a stressful place to live. “The R&R trips are virtually non-existent in Shanghai today,” says Kate Lorenz, Managing Director of Ark International, an orientation and housing company. “It isn’t the hardship posting it used to be and we’re seeing many of our clients downgrade the city’s rating as a difficult place to live.”

Downgrading the city isn’t simply a way for companies to pay their employees less, though that may be the end result. It is supported by a wave of willing expats who are actively seeking to come here and don’t need the traditional enticements offered in the past. Such expats bring competition for jobs and consequently cuts in packages. For many mid-level employees looking to take a step up the career ladder, Shanghai is the perfect opportunity; people are swapping the package for a promotion.

That’s not to say employment packages no longer exist. Other than the R&R trips, Lorenz is not seeing swingeing cuts but witnessing a more subtle change.

“More people are becoming what we call half-pats: they take a monthly lump sum with which they pay their own accommodation and school fees and whatever else. Employees can make their own decisions about what to prioritize and the company invariably saves money.”

Beverly Burgess, Regional Marketing Manager for eBayBeverly willingly moved from Sydney to Shanghai in early 2009. “The economy wasn’t doing so well in Australia and so I was looking to move somewhere more prosperous.”
Package includes:

• Full health insurance, including maternity if needed
• A look-see trip to check out Shanghai before committing to coming
• 25 percent of salary paid as a bonus to cover accommodation and any other additional costs
• All packing, shipping and storage • One economy flight home each year
• 40 hours of Mandarin lessons

This is the path that eBay has taken in China. “We don’t offer a standard expat package,” says Jing Huang, head of human resources for eBay in China. “Each individual is offered a tailor-made deal, usually with a transition bonus that takes into account their level within the company and situation in their home country.”

Employees with families are a particularly expensive option for companies, because they require additional health insurance and school fees. Anna Wethered, China Country Manager for Orientations, a global relocation company with offices in Shanghai, says she has noticed a recent change in the expat demographic coming to the city. “It’s hard to know how much what we’ve seen is a true indicator, but anecdotally it would seem companies are, where possible, opting to employ people who don’t come with two children and an RMB400,000 school fee bill.”

THE TEACHERMr. X Teacher at Shanghai American SchoolMr. X wishes to remain anonymous. “Our package is extremely generous. My salary is similar to back home, but all the added extras mean I save much more.”
Package includes:

• Salary RMB350,000
• Accommodation at Shanghai Racquet Club
• Full healthcare, including maternity cover
• One economy flight home each year
• A place in the school for up to three children
• One-off relocation bonus of RMB35,000-55,000 per couple or RMB14,000-28,000 for an individual
• Shipping allowance of RMB8,000-10,000
• Fitness allowance of RMB7,000 per year

Another recent phenomenon is an increase in ‘localization’ packages where employees are offered a contract with benefits gradually stripped away as they get used to living in Shanghai. This might mean that accommodation is paid for the first year, half-paid for the second year and then not paid at all after that. “We have seen a huge growth in localization packages over the past couple of years. Companies recognize that setting up here is still a difficult task for families, but aim to reduce the costs for the company over the long term,” says Wethered. But what of that vast shapeless destroyer, the global recession – how is this affecting Shanghai? Wethered wonders if it’s had much impact. “We have heard a lot of talk about plummeting rental prices and swathes of expats returning home, but this isn’t the reality we are experiencing,” she says. “A handful of people bagged a good deal, but by and large rentals have remained stable – particularly in the popular expat areas like Jinqiao. Already this year we have seen around a 15 percent increase in rental prices.”


Bevis Jones Visual Effects Supervisor
Bevis moved from London with his family last August. “I came here because of the opportunities that simply aren’t available back home. I pay school fees of RMB200,000 a year out of my own pocket.”

Package includes:

• Salary RMB440,000
• Health insurance for whole family
• Economy flights home once a year
• RMB4,000 towards accommodation
• Optional Mandarin classes during work hours.

The schools, often a reliable litmus test for the health of the expat economy, seem to tell a similar story. Harlan Lyso, Superintendent at Shanghai American School, believes the international schools all took a bit of a hit in terms of numbers, but most have recovered quickly.

“We are already back up to 2008 figures and we are projecting that the 2010/11 school year will see our highest enrollment yet,” says Lyso. SAS sees the situation from both sides of the coin, as it is currently also China’s biggest expat employer, with more than 300 overseas staff on the books. “We are not cutting back what we offer staff,” says Lyso. “This year we have increased teachers’ salaries by four percent and maintained a comprehensive employment package.” He believes these steps are necessary to attract the very best teachers and therefore keep numbers high.

THE FULL PACKAGEMr. X Engineering Senior Project ManagerMr. X wishes to remain anonymous. “I think we get a pretty good deal. I don’t know how it compares with others.”
Package includes:

•Salary RMB525,000 Lump sum mobility premium 25 percent of salary
•All-inclusive health insurance
•Accommodation RMB25,000 per month, plus utilities School fees
•Car and driver RMB15,000-20,000
•Tickets home for all the family once a year
•One month’s salary mobility bonus on arrival and on departure
•Appliance allowance RMB20,000 Pet relocation RMB28,000
•One hundred hours of language lessons
•Orientation visit Packing service and shipment of all household goods
•Spousal allowance RMB17,000 for training or job search costs

A recent HSBC report looking into expats’ finances across the globe reported that 30 percent of expats in China have scaled down their spending on essential day-to-day items. This sounds like a significant belt-tightening, but when you compare that with the 79 percent in the US or 75 percent in the UK, China doesn’t look so bad. In fact, HSBC rates China as number 11 out of 26 in the top locations for global expat finances. The scale is worked out by a combination of expat disposable income, savings and luxury items owned. Russia was listed as the number one place for an expat to make money and France was at the bottom at number 26.

THE DOCTORDr. Gregg Miller Emergency Physician, Shanghai United Family Hospital.“Expat doctors often make less money here than in their home country. I make two-thirds of what I did in the US. Doctors come here for the experience or as trailing spouses, not to make money.”
Package includes:

Health insurance
Economy flights home once a year
No accommodation or school fees

Today in Shanghai we are seeing a more integrated expat population, not simply confined to compounds and chauffeur-driven cars. Part of that is to do with the sheer volume of people coming to the city. In the top-level jobs these packages still exist, but what we are seeing now is companies expanding and offering more mid-level positions. The lavish packages haven’t disappeared; they have simply been watered down. “A company bringing in a top level executive is still going to have to provide a package to suit – and that includes an RMB70,000 per month villa, a car and driver and all the trimmings,” says Lorenz. “But the reality for most people is that expat packages have changed forever.”

“I won’t come unless….”
Real deal breakers we encountered:

1. “… I can bring my horse and parrot.”
2. “… you ship over my Harley-Davidson.”
3. “… there’s a grand piano in my apartment.”
4. “… you move the kitchen sink – it’s bad feng shui.”
So it’s true, the heyday is seemingly over. But before you tear up your expense claims and board the next fight home, take a minute to remember why so many of us are still here: super Shanghai, we love you.


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